Silvercorp Metals Inc. is engaged in the acquisition, exploration, development and mining of high-grade silver-related mineral properties in China and Canada. Silvercorp is the largest primary silver producer in China through the operation of the four silver-lead-zinc mines at the Ying Mining Camp in the Henan Province of China….

Now with US$230.5-million in cash, no long-term debt, strong operations and the lowest production costs among its global industry peers, Silvercorp sees today’s unprecedented market volatility as one ripe with opportunities to grow its business in the long term.

Sounds like a great story, doesn’t it? So why does the chart look like this?

Why did the share price drop from $15.30 on April 8, 2011, to a low of $6.20 on September 13, 2011? Obviously the decline in the silver price played a part, but the bigger reason is allegations of fraud by some determined short sellers.

I believe the short sellers are wrong, and they have handed everyone a great buying opportunity.

So, I’m buying. I started buying this week, and I will continue to buy as the price continues to increase. I assume the 50 day moving average will be breached to the upside shortly, and then the 200 day moving average will be next. I’ll start thinking about selling over $10, but if the price of silver resumes it’s ascent I don’t see why the yearly high over $15 can’t be achieved.

Fasten your seatbelts, and watch the action. A short squeeze is fun to watch, because as the shorts start covering the price can be driven much higher, very quickly.